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Local Sales and Use Tax on Residential Use of Gas and Electricity

Residential use of natural gas and electricity is exempt from most local sales and use taxes. Counties, transit authorities (MTA/CTD) and most special purpose districts (SPDs) cannot tax residential use of gas and electricity. Any city that adopted local sales tax effective Oct. 1, 1979, or later MAY NOT tax residential use of gas and electricity. See Attorney General Opinion No. H-1282 (1978).

However, certain municipalities that adopted local sales tax before Oct. 1, 1979, and two specific types of SPDs associated with those municipalities can opt to impose local tax on these purchases.

Municipalities

Any city that imposed sales tax before Oct. 1, 1979, could have retained the tax by ordinance on or before May 1, 1979, OR can reimpose the tax at any time. See Rule 3.334(l).

Any city not included on either list is not eligible to impose the tax.

Special Purpose Districts (SPDs)

Effective Jan. 1, 2010, certain SPDs located in all or part of a municipality that imposes a tax on the residential use of gas and electricity can impose tax throughout the special purpose district on residential use of gas and electricity:

a fire control, prevention and emergency medical services district organized under Chapter 344, Local Government Code that imposes sales tax under Tax Code 321.106

a crime control and prevention district organized under Chapter 363, Local Government Code that imposes sales tax under Tax Code 321.108

Other types of SPDs, including library districts, hospital districts and emergency services districts, MAY NOT tax residential use of gas and electricity.

Effective Date Information for Eligible SPDs: An eligible SPD can adopt a resolution or order to impose the tax on residential use of gas and electricity on or after Jan. 1, 2010, the effective date of Tax Code Section 321.1055. A resolution or order adopted before Jan. 1, 2010, has no legal effect.

After adoption, the SPD must send a copy of the order or resolution to the Comptroller by U.S. certified or registered mail. Once the Comptroller's office receives it, the order or resolution will become effective after one calendar quarter elapses. For example, an order or resolution received on Jan. 11, 2010, becomes effective on July 1, 2010.

If the city associated with the SPD ceases to tax the residential use of gas and electricity in which a SPD is located, the SPD may not tax the residential use of gas and electricity under Section 321.1055(d).

A list of all fire control, prevention, and emergency medical services districts and crime control and prevention districts located in all or part of a municipality that are eligible to impose tax on the residential use of gas and electricity. The board of directors of a district on this list may impose the tax by order or resolution adopted in a public hearing held on or after Jan. 1, 2010, by way of a vote of a majority of the membership of the board.

These lists contain the name of each SPD, the associated city and an indicator as to whether the SPD boundaries conform to the city boundaries.

While our office tries to keep this information current, the lists are revised only if we receive formal notice of a reimposition, adoption or repeal of sales and use tax on residential use of gas and electricity from an eligible city or SPD.

If you have questions about Local Sales and Use Tax on Residential Use of Gas and Electricity, please contact us.

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